Österreichische Postsparkasse, Vienna, founded 1883 “k.k. Österreichisches Postsparkassenamt”, architect: Otto Wagner (built 1904-1912)

As a result of the First World War the persistent shortage of domestic and foreign capital for investment in the economies of Central and Eastern Europe, as mentioned above, worsened. At the same time, due to the devastation of the war the demand for capital rose dramatically. After the collapse of the Austro-Hungarian Empire in 1918 new stock exchanges were established in the successor states of the former empire. The scene had been dominated by the Vienna Stock Exchange and to a much lesser degree the Prague Stock Exchange, founded in 1871. In the 1920s new stock exchanges opened up in Belgrade, Bratislava, Brno, Ljubljana, Warsaw and Zagreb, which competed with Vienna. Their main business was in dealing in securities, bills and foreign currencies and not shares. The same was true for the Vienna Stock Exchange during the interwar years. Only in the years 1926/27 did the currency situation stabilise after the hyper-inflation in the successor states of the Habsburg Empire after the First World War and central banks had been established in all new states. The finances of Austria, Hungary, Poland and Bulgaria were under international supervision and the new central banks had to be independent from the state, but they had to act as lenders of last resort together with the respective governments. Especially in Austria the “Franc Speculation” further destabilised the financial scene.


Vienna was still the commercial and financial centre of Central, Eastern and South-Eastern Europe with international connections and the main Viennese banks were still among the most important on the continent. It was the time of young speculators who bought and sold shares in enterprises and foreign currencies for speculative purposes void of any national or political inclinations. Camillo Castiglioni was one of them. He was born in Trieste and had moved to Vienna before the First World War. In 1924 he owned high stakes in eight Austrian banking institutions, the majority of shares in 34 industrial companies and controlled five Viennese papers. He had invested in such prestigious enterprises as Austro-Daimler-Werke, Fiat Österreich and the steel works Schoeller-Bleckmann. The basis for his financial success was his investment in banking institutions that guaranteed liquidity for further investments in industrial enterprises and then in companies in related business fields. He owned, for instance, a high amount of shares in the metallurgical industry and then invested into the automotive industry and other metal-processing industries. His far-reaching international connections helped him to overcome his financial breakdown in Vienna and then to move to Berlin, the USA and finally back to Italy. Another of the “famous” speculators of the 1920s in Vienna was Siegmund Bosel. He had grown up in a rather poor family and founded his first textile business at the age of 20 with a partner. His spectacular rise began during the First World War when he supplied the Viennese police with urgently needed goods. He smuggled textiles and raw materials from all parts of the crumbling Austro-Hungarian Empire. Then he started speculation in foreign currencies and founded his own bank He was successful in the fight with Castiglioni over the control of the Unionbank in Vienna and he competed with the German speculator Hugo Stinnes for control over the huge Silesian coal mines. Both speculators went spectacularly bankrupt together with many others in the “Franc Speculation”. They had speculated on a further dramatic drop of the value of the French franc and tried to bring this fall about when the decline was suddenly stopped and they lost their fortunes.


The Vienna Stock Exchange never really recovered from this disastrous wave of speculation in the interwar period. Nevertheless many Czech, Hungarian, Yugoslav and Polish securities were still traded there and that’s why the new stock exchanges in the successor countries of the Austro-Hungarian Empire kept close business ties with Vienna, which was still an international financial centre. In 1927/28 the Vienna Stock Exchange had already tried to coordinate rules and regulations and conditions of membership and by that improve the cooperation between the capital markets in Central, Eastern and South-Eastern Europe. A process that is underway at present again, as described in the introduction. In the interwar years, however, the financial crisis of 1931 ended these attempts abruptly.


As the examples of Castiglioni and Bosel showed, the stock exchanges were frequently shaken by speculation, scandals and even bribery of the press – Castiglioni controlled five newspapers in Vienna. Yet state controls and legislation that should have effectively supervised stock exchange activities were often ignored in Vienna and even more so in Eastern and South-Eastern Europe. Only Czechoslovakia kept a tight state control over stock exchange activities in this region. That is one reason why the stock exchanges, whose economic impact in the region was never significant, further dramatically decreased in importance in the 1930s. Despite its ups and downs the Vienna Stock Exchange remained the only one in the region that has been continually trading until today with the exception of the Second World War. Vienna had been an international financial centre for a long time and it still was. It derived its significance as a capital market from its operations in Central, Eastern and South-Eastern Europe. When the League of Nations examined the bankrupt Austrian financial system after World War I, the Layton-Rist Report of 1925 described the function of the Viennese banks before the war: “Viennese banks led the penetration of Eastern and Southeast Europe with Austrian capital.” (Teichova, Alice, Banking and Industry in Central-East Europe, in: Rathkolb, Oliver / Venus, Theodor / Zimmerl, Ulrike (eds.), Bank Austria Creditanstalt. 150 Jahre österreichische Bankengeschichte im Zentrum Europas, Zsolnay 2005, 151)


The Credit-Anstalt was the most important of the Viennese banks. After a period of fusions from 1925 – 1930, it was ranked as the biggest of Viennese banks, far ahead of all the others. Its balance reached 55 per cent of the combined balances of the remaining six Viennese banks in 1930 and it serviced 60 per cent of their total debtors and 74 per cent of their total securities. In the Hungarian part of the former empire 57 per cent of the total capital was concentrated in the six most important Budapest banks in 1918, but only the Hungarian General Credit Bank, which itself was linked to the Credit-Anstalt, could be compared to it. Together with the second largest Budapest bank, the Hungarian Commercial Bank, the Hungarian General Credit Bank controlled more than one third of the capital of the entire credit system in the new borders of Hungary. In the concentration process in the 1920s, which took place in Hungary as well, the two banks headed most of the important industrial combines. In the industrially more advanced Czech lands, Bohemia, Moravia and Silesia, the most important bank was the Zvinostenská Banka in Prague. It had spread its influence among Czech industrial firms as well as among businesses in the Slav areas of South-Eastern Europe. It reached the peak of its development during the First Czechoslovak Republic from 1918 until 1938. The Austrian, Hungarian and Czech commercial banks intervened on the stock exchanges and influenced the exchange value of securities. They were able to satisfy demand if there was a shortage or to withdraw securities from the market if there was a lack of buyers.

Literature: Teichova, Alice, Banking and Industry in Central-East Europe, in: Rathkolb, Oliver / Venus, Theodor / Zimmerl, Ulrike (eds.), Bank Austria Creditanstalt. 150 Jahre österreichische Bankengeschichte im Zentrum Europas, Zsolnay 2005,148-161

Wahl, Niko, Die Könige der Inflation, in: Riedl, Joachim (ed.),Wien Stadt der Juden, Zsolnay 2004, 238-240